This is the sort of story, noted in its earlier stages in this blog earlier this year, that makes a pro-worker, pro-labor, pro-union attorney want to hang it up and go earn the hourly rates that management pays its big-firm employment litigation counsel.

Lisa Mallory, the director of the D.C. Department of Employment Services, told the D.C. Council that her agency had detected $1.9 million in overpayments to District workers who collected unemployment benefits while on the city’s payroll.

…

Pedro Ribeiro, a spokesman for Mayor Vincent Gray, said he did not know when the city’s probe would conclude, but he said Gray remained committed to the investigation.

“We intend to move it until every case is closed,” Ribeiro said. “They’re going to settle, we’re going to sue them, or they’re going to go to jail.”

The purpose of the original unemployment insurance programs was, and remains, the delivery of limited assistance to workers who, through no fault of their own, lose their jobs. Not only did workers get benefits while on the clock, but the very dishonesty itself justifies their firing from public employment. Dishonesty against one’s employer – the District of Columbia government! – justifies a firing after which no benefits will be paid, but the act of defrauding the unemployment insurance office itself will surely disqualify them from benefits beyond a mere no misconduct filing.

I do not handle UI appeals in the District of Columbia and do not know the precise current administrative penalty for defrauding UI. What is clear is that these workers are going to lose their jobs in many cases and will not only be unable to collect unemployment but will owe back benefits. Some of them may actually get prosecuted for UI fraud criminally; while criminal prosecution is not particularly common in Maryland where I practice primarily, it is a crime here too and such prosecutions do occur. In Maryland, the administrative penalty for fraud on the UI Division is one year’s absolute ineligibility for benefits from the date of the fraud (generally, an under-reporting of weekly wages); the criminal penalty when applicable includes jail.

Not everyone who is accused of fraud has committed fraud. Sometimes good-faith errors occur in the reporting of wages, especially when employers mishandle hours calculations, withholdings, tips, sales commissions or the like. Sometimes workers neglect to read carefully and report their net wages after tax withholdings, rather than the gross wages as required. In Maryland, the UI fraud investigators do not automatically make a finding a fraud after every case; sometimes a mere error correction is issued, but repeated errors that make no sense outside of fraudulent intent will result in a preliminary finding of fraud that a claimant may appeal to the Lower Appeals Division for review.